DoJ, FTC investigate Apple's subscription service

Justice Department none too pleased

Apple is being investigated by the US Justice Department and Federal Trade Commission over concerns with its subscription services.

Although a formal investigation is not yet decided on, the WSJ reported that the two organisations will be looking hawk-eyed at how Apple is dealing with companies that intend to ply their wares via the App Store or iTunes.

The news will serve as a further reminder to Apple that it will want to be on its best behaviour, following an EU spokesperson declaring that the European Commission was similarly wary of the subscription service, stating that it would be “carefully monitoring the situation”.

The main antitrust matters that are being highlighted surround the 30 percent cut of any sales that Apple is demanding from publishers supplying content such as online news or music on Apple’s range of devices.

This large slice of the action that Apple is demanding has unsurprisingly riled many in the publishing business.

Apple’s rules do not state that companies cannot continue to sell subscriptions separately, however the fact that Apple demands that it is able to sell at the lowest possible cost means that firms will find it very difficult to attract customers to their own sites when Apple is able to sell at a lower price.

Furthermore Apple would prohibit any linking to any external sale sites from the App Store, a rule which could over step the mark with antitrust laws according to legal experts. But in order to prove that Apple are actually contravening antitrust laws it would be necessary to prove that Apple has strong market power, and is wilfully abusing it.

While proving that Apple has a strong market position may sound like a rather pointless task in stating the bleedin’ obvious, it is actually harder to prove than it appears at first glance.

For example, while the certain areas of advertising and media may have you believe that every single earthling has an iPhone clasped to the side of their head at all times, the market share of smartphones is apparently 16 percent, with mobile phones in general subsequently significantly less.

Of course on the tablet front Apple’s iPad is currently all conquering, but with the influx of rival tablets either having arrived or on their way this unassailable position is likely to change in the near future.

Furthermore, with Google having released its own subscription service recently, allowing publishers to hold on to the princely sum of 90 percent of revenues, Apple may be wise to rethink the cut that it is offering.